Report: From the frontline

Summary

Originally, when Universal Credit (UC) was designed and implemented, it set out to update and simplify this ‘legacy’ benefit system and improve work incentives. It aimed to introduce a system that “makes work pay” and, in doing so, intended to reflect the world of work. While these aims are not problematic themselves, there have been a number of unintended consequences as a result of how the system works. The way in which some of them have been designed has meant that they either do not reflect the world of work or do not “make work pay” as originally intended. Not only that, but our advisors are seeing people who, as a result of UC, are having to live on incredibly restricted incomes or having to borrow large amounts from family and friends. In some cases, it is pushing people towards destitution, rent arrears and homelessness.

The introduction of UC also coincided with a series of changes to welfare aimed at tackling the ‘ballooning’ housing benefit bill. UC retains a separate housing element to help pay the rent, based on the existing housing benefit system. For private renters, this is called Local Housing Allowance (LHA) and the rate at which it is paid has been frozen for four years as part of the welfare reforms. At the time these reforms were introduced, we warned that they could undermine attempts to reduce homelessness. A major cause of homelessness is the inability to compete in the housing market, particularly with the affordability of market rents. With less and less social housing available for those on low income, the private rented sector is being heavily relied upon. Adequate housing benefit levels that actually reflect the private rental market are, therefore, the most vital short-term tool in preventing homelessness. The answer to achieving this is in the long term is by investing in the provision of genuinely affordable, social housing.

This report draws on what we are seeing in our services across the country, combined with other detailed research, to provide a unique insight on the detrimental impact UC is having on people’s lives. We examine the strain this is putting on people, but also on the wider public sector, such as the difficulties currently being encountered by homeless services at local authorities. We then set out our recommendations for change.

The second briefing is a research report looking at the relationship between the LHA rates and private rents, serving as an accompaniment to the main report.